The business and power reality behind customer experience transformation

Being utterly customer-centric and putting customer (experience) first is a ‘must’ (and always should have been) and a mantra for all organizations. It’s even a core reason why organizations digitally transform. At least, so it seems.

The real reasons why we focus so much on customer experience and the digital transformations to enhance it is not just about genuine, let alone fluffy, customer interest as we like to think nor about how companies across the globe like to say how ‘they really care’. Businesses don’t really ‘care’ about customers as such, just as most customers don’t really care about your business or brand (yes, there are exceptions). There is far more at stake than this ‘customer first’ rationale and the transformations that are happening in organizations – with a focus on customer experience – are far more holistic than is often believed as explained below.

The rationale of customer-centricity: putting customer intimacy, care and empathy in perspective – and at scale

Sure, businesses and brands in the end are people and in companies that succeed at putting the customer first, there are loads of people who care about their customers. Sure, brands try to connect in more emotional and “empathic” ways, even if I prefer to refrain from using the term empathy in a business context. The call for a more human business and customer intimacy is indeed loud. Yet, intimacy is what marketers want, not necessarily what customers want (intimacy and empathy are not the same as caring about customers and customer experience).

Intimacy is what marketers want (at scale), not necessarily what customers want.

Moreover, businesses – or let’s say boards and C-level executives – don’t seek to care in a human way about individual customers, which isn’t some kind of judgement. They seek intimacy at scale, just as customer-centricity is about caring in a prioritized way and not about looking at each individual customer – in the same way. What else can you expect? If it doesn’t scale, it doesn’t pay and if it doesn’t pay it isn’t business.

Despite what some may dream, until further notice businesses care about profit, growth and survival in very challenging times. Customers care about being sure that when they buy what they need for whatever reason, they buy the best, easiest, cheapest, fastest, most gratifying and/or smartest way possible, depending on the context.

Holistic digital transformation: the customer is just one – albeit crucial – part

We don’t transform to enhance customer experience. We transform to achieve business goals.

Again, this isn’t a judgement about people, it’s a wake-up call and an appeal to refrain from the fluff that doesn’t serve customers nor businesses. And at the same time it’s a call to look more at the business realities of digital transformation in the enterprise-wide sense where the focus is still too often on “amazing” experiences, creating a customer-centric culture and the front end and not enough on the need for a holistic digital transformation approach whereby customers, stakeholders and business goals are beacons to get your strategy right, not the sole components or end goals of such.

We don’t transform to enhance customer experience. We transform to achieve business goals and acquire business competencies BY focusing on, among others, customer experience as a condition for growth in this day and age. By the way: this focus on customer experience should happen in and end-to-end and holistic way too.

It’s time to get real. A while ago I saw an article on Forbes (forgot the link) that said digital transformation is moving from the marketing and customer equation into the business. This is sheer nonsense and stems from the fact that digital transformation is confused with digital marketing transformation or digitally transforming around the customer alone (and also because quite some marketers are very vocal regarding digital transformation.

Digital transformation is digital BUSINESS transformation and by definition holistic digital transformation. It concerns information management, business process automation and optimization, collaboration, aligning front end and back office, technology choices and not just customers but ALL stakeholders, from your front-office employees and knowledge workers to partners, vendors, players in your supply chain and the broader ecosystem in which you operate, among others. It’s about those core competencies, new business models, innovation and the preparedness/responsiveness required for today (often catching up with reality) and tomorrow (evolutions and, OK, disruptions). So, it’s not correct to claim that digital transformation moves from marketing to business overall. It always was about business overall.

This doesn’t mean that the customer and customer experience aren’t crucial to succeed in digital business transformation but let’s face it: organizations that don’t realize how essential the customer is for their survival don’t really have a reason to exist.

Customer experience as a fight over market share and power

If the customer needs to be treated as a crucial business asset (which needs to be done) and the end-to-end customer experience makes the difference, then obviously the fight over customer experience is one of power.

The rationale for organizations to focus so much on customer-centricity and customer experience has little – if anything at all – to do with a more human form of business or caring in the human sense. I never sat in an exec meeting, boardroom or informal business talk with a CEO where the need to focus on customers was described in terms of empathy or truly trying to make the lives of customers better. If you have, please do let me know.

Again, this doesn’t mean that there aren’t employees who genuinely care about a customer or that there aren’t businesses where a mindset of empathy and care isn’t more present than in others or where corporate social responsibility is more than PR, we’re not (too) cynical. What it does mean – and I do realize I repeat myself, for a reason – is that for a business the only thing that matters is the bottom line, survival and future growth and that the emphasis on customer experience and customer-centricity is just about that: business.

And in today’s business reality, possibly more than ever, winning in customer experience drives corporate goals of power, control and market share. If the customer needs to be treated as a crucial business asset (which needs to be done) and the end-to-end customer experience makes the difference, then obviously the fight over customer experience is one of power. In case of doubt: yes, there is a clear ROI for the optimization of customer experience.

Enhancing customer experience for a ‘digital’ customer is another way of talking about cost cutting

The focus on customer experience de facto is mainly about cost cutting in times where customers are more used to – and asking for – possibilities to serve themselves on their own terms. With digital technologies and platforms they can and it’s an unprecedented opportunity for businesses to develop approaches that meet these demands and save costs at the same time by digitizing, automating, digitally empowering, while cutting a lot of costs, among others by replacing workers by digitized and automated processes and reducing service costs, to name just a few.

The changed customer expectations, which are partially genuinely changed expectations and partially essential expectations that have lived forever but now can be and are claimed, offer cost-saving opportunities but at the same time challenge businesses: in the front end, across supply chains and ecosystems and in the back office. The reason of these challenges are about business as well. If customers don’t get what they want on their altering terms they go. And most so-called disruptive companies are challenging the status quo because they offer those experiences that customers do seek with the well-known impact on changing dynamics across all industries.

The biggest fight of all: supply chains and control over manufacturers, middle men, data and the last mile

The empowered and connected consumer is a cost-saving dream for every businesses that has the essence right.

These more customer-centric companies, who have their processes, back office, front end and supply chains shaped better around the expectations of today’s customer, obviously care about their business too. Just as other organizations they simply know that in order to win they need to win in all aspects of customer experience(s).

The fight over the customer, by focusing on customer experience, is not just about costs, however. It’s also about power and control. Those few organizations that continue to raise the bar of customer experience and force all other businesses, regardless of industry, to follow, are essentially building huge databases of customers and far from only in the traditional sense. They’re building networks of closeness to consumers and control over the last mile, to refer to SAP’s Sameer Patel, of the supply chain. They’re trying to become unavoidable in that last mile by relentlessly improving customer-centricity and customer experience as a way to fully redefine the way business is done in their markets and beyond.

And it isn’t just about the last mile. It’s also about control over the manufacturers and creators, the middle men, the networks of content and influence, the data pipelines and so much more. We won’t tackle them all in this post.

Let’s just take a look at Amazon and the last mile. Amazon isn’t an e-commerce company. It’s a company that, as we increasingly see, is replacing the traditional middle man in distribution and becomes the inevitable power in controlling the last mile, the manufacturer and anything in-between. That’s why you’ll see more announcements and rumors about Amazon’s moves in logistics, supply chain and, before you know it, express deliveries – the last mile in the distribution of physical goods. That’s the battle the company fights, obviously also in regards to ‘digital goods’ (and data and networks of content). More are trying in other industries and it’s only a matter of time before Amazon and others will intensively move into industries that are far beyond the current industries they seem to be active in. As you know, many already do. What’s the future core business of Google? Maybe Uber? Apple? PayPal? Big traditional players in specific verticals that are reworking their business models to compete and maybe even outperform those digital companies and non-traditional market entrants which are seen as genuine risks across several industries? New and future ecosystems of partners who can collaboratively create new de facto monopolies? The owners of the infrastructure powering the digital business reality? Others whom we even overlook today?

Get big, get niche or get out is back – or so it seems

Those are some of the often ‘hidden’ real reasons why customer experience excellence is crucial for every organization: because customers expect it, because competitors – beyond their own industry – force businesses to deliver upon it, because the so-called empowered and increasingly connected consumer is a cost-saving dream for every businesses that has the essence right, and because there is a genuine fight over the last mile, crucial business success aspects and assets and, last but not least, the ‘new’ and less tangible business assets of today (such as data).

If you think that digital transformation is just about marketing or customer experience as some still seem to believe, think again. Digital transformation is about the processes, supply chains, information value chains and other business elements that enable better customer experience but most of all enable the organizations that optimize them, to expand beyond their traditional business, cut prices dramatically, expand their control and achieve BUSINESS goals. Those digital transformation champions, who far outperform traditional players which are still working with disconnected, paper-based, hybrid and thus far too expensive and slow processes, acquire the competencies to compete with anyone in many areas once they decide to roll out these competencies into areas such as logistics, to touch upon just one aspect of Amazon’s evolutions as an example.

Obviously, markets are too complex to be dominated by one or two players. And, yes, there is more than the supply chain and last mile (think innovation, for instance) but the good old adage (or is it cliché) of the dotcom period seems to be back (well, it was never really away), with a vengeance: get big (in areas where you can scale, which is what Amazon aims), get niche (in areas where there is too much complexity or specialization or areas where you simply can do better) or get out. The decisive factors are and will be customer-centricity, customer experience and the scale and cost benefits achieved by those who have digitally transformed and optimized.

Because, indeed, customers don’t really care about your business that much: they mainly care about what, where and how they can buy, ease and frictionless experiences across the board (even willing to pay a premium today but what about tomorrow?) and, let there be no doubt, about price. They certainly don’t care (too much) about who will offer them that and how. Transform for all the right reasons and not just in one area. And, yes, some empathy and genuine care matters and helps in business too.